ADDISONS - Comerclbl Lawyms - Csa25 ADDISONS
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Australian National Retailers Association Submission accompanying application for authorisation of arrangements for a trial of plastic bag charges by Coles, Woolworths Limited and any other participating retailers June 2008 &a5 ADDISONS - COmERClbL LAwYms - csa25 ADDISONS Table of Contents Introduction Executive Summary Description of the Parties 3.1 ANRA 3.2 Coles 3.3 Woolworths 3.4 IGA 3.5 Other potential participant - Foodworks 3.6 The role of Aldi The Background to the Pilot Program 4.1 The Problem with Plastic Bags 4.2 Plastic Bags and the Grocery Retail lndustry 4.3 Environment Protection and Heritage Council (EPHC) 4.4 The Victorian Government's approach The Pilot Program 5.1 Purpose of the Pilot Program 5.2 Participants and Locations 5.3 Charges 5.4 Timeframe 5.5 Costs and Profits. 5.6 Reporting The Application 6.1 Why authorisation is sought 6.2 The conduct which is sought to be authorised Statutory Provisions Relevant Markets Other Grocery Industry Participants in the Relevant Markets 9.1 The market for supply of goods by supermarkets in a 3 to 5 km radius around the Fountain Gate Shopping centre at 352 Princes Highway, Narre Warren, Victoria 12 ~~ . 9.2 The market for the supply of goods by supermarkets in a 5 to 10 krn radius around Wangaratta, Victoria 12 9.3 The market for the supply of goods by supermarkets in a 5 to 10 km radius around Warrnambool, Victoria 12 10. Factual and the Counterfactual 10.1 The Factual 10.2 The Counterfactual 11. Anticompetitive detriment 14 12. Public Benefits 15 13. Interim Authorisation 16 266079~3 Page i 14. Conclusion 266079~3 Page ii dsa5 ADDISONS 1. Introduction The Australian National Retailers Association Limited ACN 118 494 643 (ANRA) provides this submission on behalf of itself, and its members, including Coles and Woolworths Limited (Woolworths), in support of the application for authorisation of certain arrangements for a pilot project trialling the introduction of a charge for lightweight plastic bags in Coles, Woolworths and any other participating retailers' outlets in certain limited locations in Victoria, under section 88(1) of the Trade Practices Act 1974 (Cth) (TPA). Representatives of ANRA would be pleased to meet with the Commission, if required, to discuss the authorisation application and the contents of this submission. 2. Executive Summary The use of plastic shopping bags is, and has been for some time now, a major environmental concern. Governments, retailers, consumers and various interest groups are grappling with the issue of how to reduce their use and protect the environment from harm. As part of the debate, ANRA was approached by the Victorian government earlier in 2008 to test the willingness of ANRA members (and, in particular, the major grocery retailers, Coles and Woolworths), to participate in a limited trial of a voluntary retail charge for plastic bags. The proposed pilot program would involve each of ANRA, the Victorian government and Coles and Wmlworths and such other grocery retailers who may wish to participate in the program agreeing to the introduction of charges, levied at a single price point, for plastic bags at the participating grocery retailers' outlets in three areas in Victoria for a limited four week period from approximately August 2008 (Pilot Program Agreements). It is proposed that the Pilot Program Agreements comprise: (a) a Memorandum of Understanding between ANRA on its own behalf and on behalf of its members including Coles and Woolworths and the Victorian government (MOU);and (b) an understanding between Coles and Woolworths and such other grocery retailers who may wish to participate in the program, in respect of participation in the pilot program and the price to be charged for the plastic bags at participating locations (Participating Retailers Agreement). Authorisation is sought for the making of and giving effect to each of the Pilot Program Agreements and for the dissemination of information and data obtained from the pilot program to ANRA and its members, such other grocery retailers who may wish to participate in the program, the Victorian government and the Environment Protection and Heritage Council (Conduct). ANRA submits that the Conduct: (i) has no anti-competitive detriment because: . participation in the pilot program does not confer any competitive advantage on Coles or Woolworths or any other grocery retailers who may wish to participate in the program; . the period for which the pilot program will run is relatively short; 266079~3 Page 1 dzzL5 ADDISONS - 'IIMW-UW~ - . the three areas covered by the pilot program are relatively small when compared to the areas serviced by each of Coles and Woolworths and other grocery retailers; . the amount of the charge will not differ by location nor by the identity of the supplier of the plastic bags used by either Coles and Woolworths or any other grocery retailers which may wish to participate in the program; . consumers will remain free to shop at any supermarket outlet of their choice; and . consumers will remain free to avail themselves of other packaging for their grocery purchases. (ii) will result in the following public benefits which outweigh any anti-competitive detriment: the ability to conduct an effective trial of the impact of imposing charges for plastic bags as a means of reducing plastic bag usage, without the need for legislation; . the ability to obtain meaningful data to use in an assessment of the best ways to ensure a reduction in plastic bag usage to the benefit of the environment; and . the potential to benefit the environment. Should the pilot program be successful, it is foreshadowed that the parties may enter into negotiations with a view to reaching a long term agreement which may include the imposition of agreed charges for plastic bags. In the event that occurs, it is anticipated that the parties would approach the Commission for authorisation of the making and giving effect to such an agreement, should it be necessary. Given the proposed timing of commencement of the Pilot Program (which is expected to occur in August 2008) and the need to complete the trial by November 2008, ANRA seeks interim authorisation to allow it to commence the program from 1 August 2008. 3. Description of the Parties In addition to the Victorian government (and in particular, the Victorian Department of Environment and Climate Change), the parties to the proposed Pilot Program Agreements would be ANRA, its members Coles and Woolworths, IGA and such other grocery retailers which may agree to participate in the pilot program. 3.1 ANRA ANRA is a company incorporated in New South Wales. It came into existence in 2006 to represent large scale retailers in Australia on policy matters. Its Board comprises: Mr Michael Luscombe, Chief Executive Officer, Woolworths. Mr Luscombe is Chairman of the Board; Mr Peter Davis, Chief Operating Officer. Bunnings Group Ltd; Mr Mark Mclnnes, Chief Executive Omcer, David Jones Ltd; Mr Mike West, Managing Director. Best and Less Pty Ltd; Ms Katie Page, Managing Director. Harvey Norman Holdings Limited; and 266079v3 Page 2 csa3 ADDISONS - mAmL.L,Aw~ - Mr Mick McMahon, Chief Operating Officer, Coles. ANRA's principal activity is to represent the interests of the national retail sector by engaging with governments, the media and the community for the betterment of Australian consumers. As part of its activities it has funded reports into matters including efforts to reduce plastic bag consumption.' Membership of ANRA is voluntary and by invitation only and depends on factors such as turnover and the need to have stores in at least two states. ANRA's members are Woolworths. Coles, David Jones, Bunnings Group, Best and Less, Ha~eyNorman, McDonalds, Franklins, Freedom Group, Just Group, Angus and Robertson, Luxottica and Borders Group. 3.2 Coles Coles has been part of the Wesfarmers Group since November 2007. The Group runs a number of businesses throughout Australia, the largest of which is Coles Supermarkets with over 740 stores throughout Australia. Other businesses include Liquorland, BI-Lo, Its Choice, Coles Express, Coles Online, Vintage Cellars and Pharmacy Direct. The other Wesfarmers retail stores, Target and Kmart, may also choose to participate. Woolworths operates over 2000 stores across Australia, including 777 supermarkets. Woolworths' businesses include Woolworths Supermarkets. Safeway, Big W, Dick Smith Electronics, Dick Smith PowerHouse, Tandy, CaltexMloolworths, CaltexISafeway. Woolworths Liquor, Safeway Liquor, BWS and Dan Murphy's. 3.4 IGA IGA is a network of independently owned supermarkets trading under the IGA brand. Over 1000 IGA stores are located across Australia and are supplied by Metcash Trading Limited, trading as IGA Distribution. The stores are grouped into 3 channels, depending on their size, range and location. The channels are: Supa IGA - large format stores carrying a large, full supermarket range, including groceries and fresh food; IGA - medium format neighbourhood stores carrying a mid-size supermarket range; and IGA X-press - small format stores catering to the convenience market. It is not proposed that any IGAX-press stores participate in the pilot program, given that they are more in the nature of convenience stores. Plastic Carry Bags, Working Towards Continuous Environmental Improvement, Report to the Chairnlan Environment Pmtedion and heritage Council. 22 May 2006. 266079~3 Page 3 csza5 ADDISONS - -rA- - 3.5 Other potential participant - FoodWorks FoodWorks is a group of independent retail supermarkets, food and convenience stores largely trading under the FoodWorks brand. The group comprises 710 supermarkets, food and convenience stores operating nationally, of which approximately 390 operate under the FoodWorks brand. ANRA understands that the Victorian government is having or may have had discussions with FoodWorks concerning its potential participation in the program but that, at the time of lodging this submission, FoodWorks has not yet decided to participate 3.6 The role of Aldi Aldi is a privately owned German supermarket chain which commenced operations in Australia in January 2001.